Eurozone business activity shrinks at fastest pace in nearly two years, according to PMI

MADRID, 24 Oct.

Eurozone business activity shrinks at fastest pace in nearly two years, according to PMI


The deterioration of the activity of the private sector in the euro zone has worsened during the month of October, as reflected by the advance of the Composite Purchasing Managers' Index (PMI), which has stood at 47.1 points from 48.1 from the previous month, which is its worst reading in 23 months, according to S

In the case of the manufacturing sector, the reading of the PMI index has worsened to 46.6 points from 48.4 in September, a 29-month low, while in the services sector, the PMI index for October has dropped to 48, 2 points, compared to 48.8 the previous month, its lowest level in 20 months.

"The euro zone economy seems likely to contract in the fourth quarter given the outlook of increasing decline in total activity and deteriorating demand seen in October," said the chief economist at S

In the euro zone, the biggest decline continued to be recorded in Germany, whose composite PMI plummeted to 44.1, its lowest level since May 2020, while total activity growth separated in France, whose composite PMI fell to 50 points, compared to 51.2 the previous month.

In the rest of the eurozone, total activity fell for the second consecutive month, declining at the fastest pace since January 2021, and with the exception of the pandemic period, since June 2013, reflecting a modest decline in service sector activity. , accompanied by a more intense drop in industrial production.

On the other hand, although the improvement in raw material supply problems helped alleviate some inflationary pressures, rising energy costs and upward wage pressures kept cost inflation overall extremely high.

This increase in costs generated a persistently high rate of increase in the prices charged for products and services, which fell only marginally compared to those of September.

"Price pressures remain stubbornly high, as rising energy and personnel costs and a weak euro offset declines in commodity prices due to improved supply conditions," says Williamson, for whom these Elevated price indicators are likely to "increase the ECB's determination to continue tightening monetary policy in the coming months despite the growing risk of recession."